Bayer's CEO: We Develop Drugs For Rich Westerners, Not Poor Indians

from the refreshingly-honest dept

We've covered the continuing efforts of emergingeconomies to provide key medicines for their populations at affordable prices. To do that, they often invoke their right to use compulsory licensing to bring down costs. For understandable reasons, the big pharma companies aren't happy with that approach, but usually dress it up as a concern about the supposed threat to "innovation" that it represents -- their claim being high prices are needed to fund expensive research. But as Techdirt has noted, pharma's estimates of expenditure here tend to be hugely inflated, which rather undercuts that argument.

"We did not develop this medicine for Indians," Dekkers said Dec. 3. "We developed it for western patients who can afford it."

That's a refreshingly honest admission that rather than wanting to save lives around the world, what Bayer is interested in is maximizing its profits by selling expensive drugs to "western patients who can afford it," and that those who can't pay can just, well, drop dead -- which, of course, is precisely what many of them will do without Bayer's drugs.

Some might say that's a perfectly reasonable position -- after all, Bayer and the other pharmaceutical companies are for-profit concerns. But they weren't always so dismissive of humanitarian concerns. Here's what George Merck, who became president of his father's eponymous chemical manufacturing company in 1929, said on the subject, as quoted on the Today in Science History site:

We try never to forget that medicine is for the people. It is not for the profits. The profits follow, and if we have remembered that, they have never failed to appear. The better we have remembered it, the larger they have been.

Indeed it is at least honest. But really if these aren't for poor Indians anyway it means Bayer will suffer no loss with the initiative. As abhorrent as the comment is it further undermines Bayer's arguments.

Why does he care then?

If they didn't develop it for Indians, and only rich westerners were supposed to be their target consumer, then why should they give a rat's ass if Indians are producing their own and selling it for 97% cheaper (from the article)?

I suspect they're really afraid that the world will begin to see what's really going on here, and other countries will follow India's lead.

Re: Why does he care then?

The problem isn't just that, "...Indians are producing their own and selling it for 97% cheaper...", while that admittedly ruffles their feathers. I think the bigger concern is that the Indians will start selling it to others 95% cheaper than they do.

This would be especially painful if they those affluent Westerners his company claims to be targeting start buying these generics.

Re: Why does he care then?

The people who discovered fire didn't do it for you. The people who invented the wheel didn't do it for you. The people who invented the tangled web of lies used to dupe people into thinking it's a good thing to prevent people from using the things that are discovered and invented didn't do it for... oh nevermind they probably did.

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Innovative drugs will be developed perfectly fine without patents and the pharmaceutical industry knows this. Everyone knew this before patents were around for so long because without patents drugs were developed and so the pharmaceutical industry had to pretend that patents were about the public interest. The industry just wants patents so that they get a patent on everything and lobby the FDA to require pre-approval for any new drugs so that pharma can prevent others from competing.

How dare those damn Indians not just skip the drugs and have a mass die off!

Seriously, they produce drugs and are going out of their way to price it out of the hands of a majority of the people on the planet. Do they understand the concept of if you let all of the people your drug could have saved die off your actively killing your total market?

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(and allowing the poor who can't afford drugs to die in favor of corporate profits is clearly not in the public interest and so is not part of the purpose of having patents. but this is proof that the true reason patents exist is not to serve the public interest but to serve private corporate interests).

there should be a public outcry over this! regardless of what this obnoxious arse hole thinks, without the 'Indians', neither his or any other company would sell sufficient amounts or numbers of their products to stay in business, let alone make a profit. just because people are rich, doesn't mean they will always be able or willing to spend the amounts of money some drugs allegedly cost to manufacture. then i have to wonder if the rich would be in sufficient numbers anyway, regardless of how many these cartels think there are!

SEE THE RICH ARE EVIL AND TECHDIRT IS EVIL CUZ IT IS RICH PEOPLE MINION RARGH! RANT RANT RANT!_______________________________________________________________________________________________ _______________________________________________________________RANTY RANT!

All asprins alike

You can Google for "The Dark History of Bayer Drugs", which reveals all sorts of interesting ugliness, but that doesn't cover the thing I remember from my youth.

What I was searching for was a lawsuit about Bayer Aspirin marketing back in the 1970's.

Anyone remember those TV commercials suggesting that Bayer Aspirin was somehow better than generic aspirin? They had a commercial with various myths proven untrue such as:* (picture of Wright Bros trying to fly) . . . If man were meant to fly, he's have wings!* (man saying...) All aspirins alikeThen the commercial goes on to explain that all aspirins are not alike. Even though each tablet is the same exact active ingredient, somehow Bayer aspirin has magical qualities not found in generics.

Of course, after a lawsuit, it was found that generic aspirins were just as good and Bayer had to stop saying this. My sixth grade teacher said: they lied.

Marijn Dekkers, is simply afraid the affordable humanitarian aid in India, will catch on and spread to other countries. He's afraid access to affordable medicines will become a priority over artificially inflated prices, which are caused by draconian patent laws.

He sees governments prioritizing sick patients over profits, and it scares the living dickens out of him.

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"Want to see something more offensive: try the new safety wrapping from Vicks' Nyquil: We don't make generic brands."

I'm not sure what you find objectionable about that. It's a widely-held but almost entirely inaccurate belief that generic drugs are made by the same companies as name brands - the only difference being labeling. They're just saying that, in this case, it's not true.

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"Then the commercial goes on to explain that all aspirins are not alike. Even though each tablet is the same exact active ingredient, somehow Bayer aspirin has magical qualities not found in generics."

And sometimes it's true. Two commercial preparations of a drug, with the same amount of the same active ingredient, may have different effects or effectiveness. For example, what binders are used and how quickly and completely the drug is absorbed. Or in the case of aspirin, coated or uncoated, buffered or not, etc. I know several people who have had bad reactions to ostensibly-identical generic versions of drugs.

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This is why drug labels also list the inactive ingredients. Some people can be allergic to some inactive ingredients. These ingredients can affect absorptions rate, but not really the underlying effectiveness of the drug.

"Buffered," by the way, just means that an antacid is included in the formulation.

Re: Why does he care then?

They give a RA precisely because once companies begin manufacture of a generic version in, say, India, that generic version will almost instantaneously become a prime candidate for export worldwide.

It is disappointing to see the constant vilification of long standing pharmaceutical companies as somehow the devil incarnate. There is nothing wrong with earning a profit. Nor is there anything wrong with differential pricing that depends upon market conditions in individual countries. For all those who rail "But people will die", it cannot be dismissed that the newer formulations are almost always not the only ones available in-country to treat a specific medical condition. Additionally, the entry into many foreign markets are conditioned upon the exporter creating domestic financial opportunities for a country's citizens. The construction of manufacturing facilities for any number of products is not at all an unusual mandate. The same can be said requiring the infusion of money to support domestic R&D. Companies is many, many industries do this all the time just to try and gain a foothold.

The comment by Bayer's rep was not particularly wise, but there is a measure of truth that Bayer does not devote significant resources over the course of many years to create a product, only to turn over all relevant information about that product to a third party so that the third party will immediately be established as a coat-tail-riding competitor having expended virtually no company resources other than modify its manufacturing facilities and processes, as necessary, to begin cranking out the product.

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Sure innovative drugs may be developed without patents...just as soon as developers figure out a way to keep others from making them and becoming competitors without having contributed anything to their development.

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There is nothing wrong with earning a profit.

Indeed. But there is a great deal wrong with prioritizing profits over human lives. Pharmaceutical companies are hardly the only ones vilified for doing this. I believe that it's an entirely criticism.

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As my, then, young mind seems to recall (and these commercials were just blasted on TV all the time, and there was no TiVo to skip them), the Genuine(tm) Bayer(R) aspirin never seemed to have any specifics on how it was better.

It was found not to be any better after a court battle.

I do understand the issue that some people can have issues with inactive ingredients. I am more skeptical that inactive ingredients would be chosen that have an effect on the efficacy of the medication.

This Is exactly why the trade agreements should be very carefully examined, If it Doesn't benefit all nations involved by respecting the people of these nations, then by the will of the people it should be dissolved. These Big Pharma Corps should have to abide by the same Hippocratic Oath that Physicians do world wide.

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If profits are not earned by for-profit businesses those businesses will quite likely shutter their doors in short order. This is a truism, so to suggest that earning profits over saving lives is wrong is a bit off the mark.

What people here seem to rail about is "they are trying to financially rape people who cannot afford life saving medications". Is this really true? Who is going to enter into a market if potential users of a product will be unable to buy it?

This issue, associated in this instance with India, is about the perception that an unfair competitive advantage is being provided to domestic industry by government fiat. In addition, once the domestic industry has the means at hand to manufacture and distribute a medication, exports follow almost immediately.

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but it's not just a matter of allergens. I read a report that the different manufacturing process and slightly different binding agents could cause the total absorption of the active ingredient (as measured by how much is in the blood) to vary widely - sometimes only 30% of the drug was absorbed, it was fairly common for the absorption to be 70-120% of the name brand. I don't remember what the numbers were for time delay variances.

I'd say (with my completely uneducated common sense) that if you are switching from a name-brand to a generic you should be mindful (and have your doctor evaluate it with you) that you could be changing your effective dose.

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Sure innovative drugs may be developed without patents...just as soon as developers figure out a way to keep others from making them and becoming competitors without having contributed anything to their development.

Except, if you look at the actual history of the pharmaceutical industry, you would know that it came out of the chemicals & dyes industries, which had nearly all of its major breakthroughs in Switzerland and Germany during periods of time when those countries did not allow patents on chemicals -- and yet the industry and innovation thrived in both countries.

So, yeah, there's plenty of evidence that you get a very dynamic and innovative industry without patents when all you're doing is mixing a bunch of chemicals together.

Re: Re: [Mostly publicly funded R&D anyway]

Actually I believe that much (most) of a typical pharmaceutical company's R&D (drug R&D that is) is actually accomplished at universities, many of those publicly funded.

The largest expense is, wait for it, marketing. Someone has to pay for all those television and magazine ads that push drugs you (as a non-doctor) can't actually prescribe for yourself. That and all the encouragement (a.k.a. kickbacks, bribes, free dinners and retreats, and my favorite lobbying).

The longer a patent lasts, and the easier it is to restrict others (including generic manufactures) the less likely we are to see new and innovative drugs developed. Get a patent, cash in, tweak that patent, cash in, country doesn't let you extend the patent on an existing drug by cosmetically tweaking it, sue that Country.

If you look at history, countries with weak/non-existent patents on drugs created the most innovative treatments. Patents discourage innovation and encourage rent seeking.

Re: Re: Why does he care then?

They do not, as the original developers, want to have to compete against their very own products in the hands of third parties who have zero skin in the game. I cannot say this is an unreasonable view.

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Who is going to enter into a market if potential users of a product will be unable to buy it?

That's a problem. It's also a great argument for nationalizing the development of medications instead of leaving it in the hands of for-profit companies.

After all, one of the good things that governments do is those things that are both essential and that won't be properly done by private industry because of the lack of profit potential. Pharmaceuticals sound like they might fall into this category.

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I do understand the history of this industry, thank you. There are many reasons why and how industries arise, but one that is cited as important in this one is that formulations were held by their developers in the strictest of confidence. The effective use of trade secrets can lead to the creation of new products, but it does have the downside of keeping others in the dark for an extended period of time. Love them or hate them, patents associated with the pharmaceutical industry can have the beneficial effect of forcing the disclosure of chemical compositions useful in the treatment of various medical conditions.

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There is a level of hypocricy in defending the Kirksaeng ruling and at the same time defending this kind of price regulation.

When that is said, some prices in the west are starting to become artificially ultra-limited supply. In that way the prices can be set high enough to cover the cost of burning the overproduced stash and then some. Not even going into the complete madness of medicine pricing in socialized healthcare. Certain newer drugs are indefensibly expensive. Maybe the west should follow the example of India and set own compulsary licenses! The only other real alternative to deal with this problem is a complete dismantling of the patent system, but that is unrealistic.

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We already have "orphan drug" legislation in US law that was enacted to promote the development and distribution of medications useful in the treatment of rare medical conditions. Perhaps there are other things that can be done, but creating USGovernment Pharma is beyond scary.

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It might be scary, but is it scarier than the system we have right now with the pharma companies? That's a subjective call, of course, but in my opinion, no, it's not. Big Pharma is absolutely terrifying and doesn't serve the needs of the nonwealthy public very well at all.

Re: Re: Why does he care then?

Nothing wrong with earning a profit if you actually earn it. Their business model relies on denying the reality that anyone else could do the same thing for less if it weren't for government protection.. The extra money they get from the legal monopoly goes right back into lobbying for more government protection (since that is obviously there largest money maker). What do you expect? Anyone who ever tried to earn an honest dollar should be vilifying them. If people are giving a company money because it's the law rather than because they choose to do business with them, well you should expect both that there will be plenty of excuses as to why and that people will vilify the company.

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Before I posted, I was trying to google it. But I only recall the news from when I was young.

The commercials I remember very strongly. I also remember the classroom discussion fairly well. I do not know any specifics beyond that Bayer had to stop the ads, and the public now knew that all aspirin was alike.

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Reverse engineering of most chemicals is mostly easy and cheap today. Some "right management" may be introduced to complicate the reverse engineering process, but it is still pretty doable. Therefore the trade secret stuff would be of lesser importance in several of these specific industries today.

The problem in allowing copying is tied to the regulatory regime of several separate organs where each chemical compound has to be screened for safety, health, environmental and in case of consumables dosis-response before it is allowed to be sold in specific markets. These requirements are very expensive and time-consuming. Since the first to bring a product to market is stuck with this bill, there would be very little incentive to be first on the market since you are unlikely to be able to ever recover these costs.

Compulsary licensing is a strong mechanism for forcing medicine prices down and if it is long enough and high enough it is still very profitable to be an inventor. But it doesn't solve any other problems of patents like cost-benefit for rare ailments, market separations by regulations and enforcement costs.

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" yet the industry and innovation thrived in both countries."

Yes, because it was an era of low hanging fruit and cheap development. We aren't in the same place now, where many bacteria are drug resistant, where there is extensive testing and insane levels of liability attached with each new release.

You sort of forget that not only has the date changed, but reality has changed as well.

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"sometimes only 30% of the drug was absorbed, it was fairly common for the absorption to be 70-120% of the name brand"

Ok, I call bullshit. Please explain how you can possibly absorb over 100% of an included ingredient? What do they include some magic fairy dust that makes replicate itself in a person's stomach? Or do they happen to have a special priest that blesses it so that it and makes it do Jesus's famous loaves and fishes trick?

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It's a percentage change in absorption rates, not the amount of the medication actually absorbed. the 120% figure means that in that case, the drug is absorbed 1.2 times as fast as the brand name version.

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Ok, that's not what he said though. I now notice that I did misread what he actually wrote which answers my original question even though it still doesn't say anything about the rate (ie. speed) of absorption though. If with the brand name you only absorb 50% of the active ingredient when you take it and with a generic you only absorb 70% compared to the brand name then I could see where you could have a different generic that where 120% of the amount that was absorbed by the brand name would be absorbed. But then again that is describing a generic that is MORE effective than the brand name not less. It also goes to show how those doing studies of pharmaceutical effectiveness (most likely for the pharmaceutical companies themselves) will go to great lengths to present figures in the most confusing way possible in an attempt to baffle the public with bullshit.

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No, developers will innovate drugs without the need to keep others from copying. They've done it in the past and they will do it again. Necessity drives innovation, if people are willing to pay for something people will be willing to produce. History and evidence supports this and there is little to no evidence to suggest that patents spur innovation. The burden is on you to prove your case with evidence, not to simply assert it, since patents are a privilege that no one is entitled to and my ability to copy or independently invent the same thing is a natural right. History is full of independent inventors without patents.

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It's a mistake to equate absorption rates with effectiveness. The two can be related -- for example, if the absorption rate is low enough (something you often see in multivitamin pills), then you'll pass the pill prior to complete absorption and get a lower does than you wanted.

What it does affect is dosage (strength and frequency). The law requires generic versions of medications to be functionally equivalent, including having similar absorption rates, but they can vary -- not only between different manufacturers, but also between different production runs from the same manufacturer.

In practice, none of this matters the vast majority of the time. Most drugs do not require an incredibly precise dosing schedule, so any variations are meaningless. The ones that do require something exact require doctor's supervision and regular testing for drug levels anyway, so the dose can be adjusted as needed.

That brings up yet another aspect of this dosing thing: even if every pill is precisely identical, rates of absorption and abosorbed does will vary anyway -- it's affected by your stress level, diet, exercise, and all kinds of other things that have nothing to do with the pill itself.

So, in my view, this entire topic is a red herring when talking about generics vs name-brand.

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Patents are worthless. Even today companies use trade secret laws to protect their secret. Why patent it if it's non-obvious when you can get it protected by trade secret law? Patents are just used to prevent others from making obvious ideas that others will independently invent. Trade secret laws should be abolished.

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and, frankly, I don't really care if a company wants to keep their special 'secret' a secret. Just so long as they don't prevent me and others from 'copying' or independently inventing whatever I want.

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I remember all that as well. In fact, in my advertising classes (which I strongly recommend to everyone who is exposed to media, whether they're interested in advertising or not -- what you'll learn may blow your mind) I remember aspirin frequently used in discussions about false advertising. Bayer's advertising around aspirin has always been more than a little shady, and the amount of lying they've done is astounding.

It continues to this very day. Remember the business about aspirin helping to prevent heart attacks? Bayer went apeshit about that and advertised it heavily -- in the process, basically lying. The effect is true, but the does required to see the effect is absolutely miniscule. As one of the researchers commented at the time, you could lick a baby aspirin once a day and get the full preventative effect.

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"forcing the disclosure of chemical composition" is a given anyway since you could not do clinical trials otherwise.

Patents make more sense for the production process than the composition anyway. To give some return of investment, one could simply make clinical trials count only for the company producing the respective medication specimens. So there would be a financial threshold for competitors, and delayed time to market.

Also independent corroborration from a third party with different financial incentives. Could have caused thalidomide to get pulled from the general market earlier.

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I get the point perfectly.And if they offered the drug at a reasonable price they would have a huge market, rather than the Indian Government feeling forced to allow production via legal loopholes.

I can sell this to a handful of rich westerners and make X.I can sell this drug internationally at a lower price and end up making multiples of X, but I can't let everyone know I sell it cheaper elsewhere or they'll all want it cheap... even thought I'd still make huge amounts of cash.

What would this captain of industry have to say about a university taking the position that "We perform research for the benefit of everyone, not just rich assholes" ?. He would probably blow a gasket.

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And that, my friends, is exactly why copyright needs to be reduced and why copyrighted items SHOULD HAVE dropped in price drastically these past few decades. Increased market plus decreased shipping and copy production costs.

The original Mona Lisa is worth something. Copies of it are just that, copies, which are cheaper by the dozen.

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"So, in my view, this entire topic is a red herring when talking about generics vs name-brand."

I agree completely with this except that it's relevant because those doing the comparison studies that claim the name brands work better are often funded by the pharmaceutical companies that will then quote those studies to claim that the generics aren't as good.

Certainly in the UK, the evaluation agency NICE looks closely at cost/benefit ratios, and just will not fund any drug seen as too expensive. That in turn means that companies wanting to supply the NHS have to be more realistic in their pricing. On the other hand, the US seems to be more of a free-for-all rush-to-the-trough for pharma companies.

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Then they need to start competing on what they can offer - such as brand recognition. It's all very well saying India can market drugs at 95% less, but that still takes effort - and if the brand name is associated with your company you can take a leaf out of the free-software companies and make more money in after-sales support. There will always be those who would rather trust a slightly more expensive product from Bayer rather than a cheaper knock-off of doubtful providence, especially if Bayer offer further services or support with the product.

Good going

Didn't know that our government does this. It's a really good move since1. The dollar to rupee conversion will put the product out of reach of most Indians2. Most Indians don't have a health insurance like in the US, so the money has to come from their pockets3. These American companies are free to sell their product in India and since the generic companies have to pay them a part of the price, they can easily undercut them. Not doing so is only artificially inflating the price while people die daily

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As much as I want to hate this guy, but the fact remains that my country seems more interested in sending fancy satellites to moon and Mars......anyways brings me to the point that if India can develop cutting edge technology to send a mission to mars which cost leeser than the movie Gravity, Why the hell isnt pharma research picking up here....... now I dnt want to get into arguments on jobs or everything......but there is a valid agrument, people are dying because medicenes are costly and here is a part of the world (Asians and Africans) who can be trained to research at 1/10th the cost..... why not ask them to slog out!

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As much as I want to hate this guy, but the fact remains that my country seems more interested in sending fancy satellites to moon and Mars......anyways brings me to the point that if India can develop cutting edge technology to send a mission to mars which cost leeser than the movie Gravity, Why the hell isnt pharma research picking up here....... now I dnt want to get into arguments on jobs or everything......but there is a valid agrument, people are dying because medicenes are costly and here is a part of the world (Asians and Africans) who can be trained to research at 1/10th the cost..... why not ask them to slog out!

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This Article is Idiotic

Why should pharmaceutical companies pick up the tab for the world's health problems simply because they are in the business of making drugs? Do we expect wheat farmers to set lower prices because there are starving people in the world? The profit margin for pharmaceuticals has to be HIGH people because it takes decades and hundreds of scientists to develop a drug, get it through clinical trials, and even after all that it usually doesn't make it to the marketplace. It's a very thankless process and can feel very futile so incentive is created on the other end. Yes, drugs are a business. People aren't solely in it for the money but when you have shareholders to answer to (your investors) you cannot strike profitably unfavorable deals because then you lose investors, you lose money, you have to shrink your company, fire scientists and the promise of any cure anywhere down the line is gone. The answer to this dilemma is subsidies. The problem with allowing India to steal technology is that they will manufacture the drug themselves, sell it for next to nothing and big pharma cannot 1) recoup its initial investments in the drug and 2) create new drugs. So there you have--it's simple economics.

Re: This Article is Idiotic

"The problem with allowing India to steal technology is that they will manufacture the drug themselves, sell it for next to nothing and big pharma cannot 1) recoup its initial investments in the drug and 2) create new drugs."

a. The Indian companies do have to pay these companies a part of the price, so this would actually help the company to recoup its initial investment

b. The Bayer CEO has clearly said that the drugs are not for Indians. If they do not sell their product in India and have no plans to do so, how would a different company selling it in India hurt them financially or prevent them from creating new drugs?